January 31, 2017

Earlier this month Josh Frydenberg the Energy Minister wrote that the states’ renewable energy targets are leading to policy chaos. But in fact the opposite is true. It is the national policy chaos that Minister Frydenberg is presiding over that is leading states to step in with their own policies to support renewable investment.

Just this week a Reputex analysis found that without further national renewable energy targets, state renewable energy targets will emerge as “the dominant player in the national energy and climate policy debate”.

Everyone agrees that state based renewable energy targets are not an ideal policy solution. State governments, federal Labor as well as industry would all prefer to see a national policy that supports renewable energy investment post 2020.

But the Turnbull Government simply refuses to implement or even contemplate such a policy. In this situation, it is no wonder that states will lead the way, as they did when the Howard Government showed a similar lack of leadership in the 2000’s.

We should also be clear about what the Turnbull government is proposing. They aren’t putting forward and making the case for a positive plan for the modernisation or our electricity system, or for the replacement of ageing fossil fuel generators which will close in the next two decades regardless of government policy.

Besides occasional calls for new coal-fired power stations from both Mr Frydenberg and the Resources Minister Matt Canavan, the Turnbull Government’s only proposition is for states to scrap their policies and embrace the type of policy vacuum we see at the national level.

Their vision is for a policy vacuum at every level of government; a vision that maximises investment uncertainty, maximises power prices and minimises electricity security. They simply have no plan for our energy future and for the government to criticize states that have plans is disingenuous to say the least.

Of course the Turnbull Government are in this position out of choice. For example, they could embrace an emissions intensity scheme (EIS) for the electricity sector as a way to support new investment, clean up our electricity system and do it at least cost. An EIS is supported by the electricity generation industry, consumer groups, the ACTU, the Energy Markets Commission, the CSIRO, the Chief Scientist, and endorsed by all state governments, Labor and Liberal alike. It is also a central part of federal Labor’s energy policy, making a national bi-partisan approach possible. But because it is not supported by the extreme right of the Liberal Party, it is not to be contemplated by the Government.

The greatest irony being that while the government cites power price concerns as their reason for ditching an EIS, an EIS has been estimated to save customers $15 billion in power prices when compared to other options, including the Government’s approach of doing nothing. Danny Price, the Prime Minister’s former energy adviser summed up this situation perfectly when he said “By doing this (rejecting an EIS), it means they are the party of increasing electricity prices and reduced energy security.”

I feel for Minister Frydenberg.

He is doing the best he can with a terrible hand dealt to him by a party that is paralysed by the clash of ideology with reality. He simply can’t do anything positive in an area that desperately needs sensible and preferably bi-partisan reform.

He has been publicly slapped down by the Prime Minister for daring to contemplate an EIS.

He is tasked with blaming the South Australian blackout on renewables when he knows the Chief Scientist Alan Finkel is right; it was caused by a massive storm tearing down transmission lines.

He needs to blame SA power prices on renewables, when he knows relatively high SA prices predate renewables and are the result of a reliance on gas and geography.

Worst of all, he is charged with leading an ideological attack on renewable energy, even though he, like the vast majority of Australians, knows renewable energy is and should be the energy future of the sunniest and windiest country on earth. 

He knows that the Australian head of Bloomberg New Energy Finance, Mr Bhavnagr, is right when he says “Renewables cost less than would be the case if you were to build more fossil fuels and definitely less than doing nothing and having no plan”. Minister Frydenberg knows he is fighting against deep economic and technological trends when he attacks Australia’s renewable energy future and he knows it is a fight he can’t win.

But then again, his and his government’s aim isn’t really to stop the inevitable renewable energy revolution. It’s to distract us all from the fact this government simply can’t deliver the reform and investment certainty Australia’s energy sector desperately needs. The fact that is where the government is focusing its efforts means we’re all losers.